New Telegraph

Tier 1 banks’ assets hit N37.5trn

Amid the harsh business environment occasioned by the COVID-19 crisis, the nation’s five Tier 1 deposit money banks grew their total assets by 29.2 per cent to N37.5 trillion in 2020, from N29.05 trillion in the previous  year, findings by New Telegraph show. Nigeria’s first tier lenders are Access Bank, Zenith Bank, Guaranty Trust Bank (GTBank),


FBN Holdings and United Bank for Africa (UBA). New Telegraph’s analysis of the banks’ audited FY’20 financial statements indicates that Access Bank was the largest of the lenders in the country in terms of assets, last year, with total assets of N8.7 trillion, which is 21.51 per cent more than total assets of N7.14 trillion that the lender reported for the 2019 financial year.


It was followed by Zenith Bank, which, in its FY’20 audited financial state-    ments, reported a 34 per cent growth in total assets to N8.5 trillion compared with the N6.34 trillion the lender posted for the corresponding period of the previous year.


FBN Holdings, the  parent company of First Bank of Nigeria Limited, also reported an impressive growth in total assets during the review period as its assets increased by 23.9 per cent to N7.7 trillion in 2020 from N6.2 trillion in the corresponding period of 2019.


Similarly, UBA grew its total assets by 37.0 per cent to N7.7 trillion in 2020 from N5.60 trillion in the previous year. According to its audited FY’20 financial statement, GTBank grew its total assets by 31.54 per cent to N4.9 trillion from N3.8 trillion in the same period of 2019.


This means that the five lenders had total assets of N37.5 trillion as at the end of last year, an increase of 29.2 per cent (N8.5 trillion) from their total assets of N29.05 trillion in 2019.


In fact, figures obtained from the Central Bank of Nigeria (CBN) indicate that total assets and liabilities of DMBs have been on an upward trajectory in recent years amid the country’s sluggish economic growth.


According to the apex bank, DMBs’ total assets and liabilities, which stood at N34.59 trillion at the end of December 2017, rose to N37.21 trillion at the end of December 2018. CBN’s figures also show total assets of the industry grew from N38.57 trillion in November 2019 to N42.89 trillion in February 2020.


Before the onset of the COVID-19 crisis, analysts had predicted that first tier lenders, which account for over 60 per cent of industry assets, would likely increase their dominance over their Tier 2 counterparts due to regulatory headwinds.


However, in its half year 2020 Economic Report, the CBN stated: “The structure of the Nigerian banking industry remained oligopolistic in the first half of 2020, with the concentration ratios of the largest six banks (CR6) at 68.1 in deposits and 65.2 in assets.


“As in the corresponding half of 2019, there was no dominance of a single bank, as the share of the largest bank in deposits and assets stood at 14.6 per cent and 14.3 per cent, respectively compared with 14.9 and 13.2 per cent in the first half of 2019.


“Fourteen banks had percentage shares ranging from 0.1 to 5.1 per cent in deposits and 0.1 to 5.2 per cent in assets, compared with 0.1 to 4.3 per cent and 0.1 to 4.2 per cent, respectively in the corresponding period of 2019.”


Indeed, going by the surge in first tier banks’ total assets last year, it seems that the country’s banking industry has defied fore- Bacasts in some quarters that the COVID -19 crisis would lead to a drop in total asset growth. Specifically, in a report released in June last year,


Fitch Solutions Group (FSG)-an affiliate of Fitch Ratings Incorporatedciting COVID-19 -induced economic headwinds, revised its forecast for Nigeria’s total banking asset growth to 5.3per cent to N44.2trillion in 2020.


Noting that since 2015, the oil and gas sector has accounted for an average of 28.8per cent of total commercial bank private sector loans, a development which has left the banking industry highly exposed to oil price shocks, the company said that even though the CBN’s introduction of a minimum Loan-to-Deposit Ratio (LDR) policy, has led to a significant growth in commercial bank loans to the private sector, it expects “this growth to slow over 2020 as the economy returns to recession.”

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